Back in 1990, a market maker at the Pacific Exchange named Rick Ackerman helped the FBI catch a criminal trader from Merrill Lynch who had poisoned several packages of Smith-Kline (now Glaxo Smith-Kline) drugs and purchased out-of-the-money put options in hopes of cashing in.Today, it’s much harder to commit securities fraud with all the tools put in place and active monitoring. But back in the late 1980s, early 1990s, there was no internet. No free charts service. No options listings in the paper. But what seemed like the perfect crime would ultimately be foiled by one man: Rick Ackerman.

We spoke with Rick to hear how he ended up catching the first criminal to get busted for such an elaborate crime, which Rick mentions briefly on his official website. You can read more about it in the NY Times and the LA Times.

Ackerman was a market maker at the Pacific Exchange in San Francisco during the 1980s. He worked primarily in the Smith-Kline pit, so he was familiar with drug companies and their line of business.

In 1988 or so, a man named Eddie Marks worked for Merrill Lynch as a trader. He had no previous criminal record other than some “parking tickets and maybe a few minor incidents,” according to Ackerman. Marks understood how leverage and options worked and how one could make a lot of money if a bet paid off. So Marks bought rat poison, stuffed it in containers of the drugs Contac and Dietac and then flew to Houston and Orlando to plant the poisoned medicine on store shelves, thinking he would never be caught.

Marks then bought, according to Rick, 360 out-of-the-money puts on Smith-Kline with short expiration dates that were basically worthless. (Unless alarming news struck the company causing its stock to fall drastically.) At the time, Smith-Kline stock was trading around $80 a share and the strike price of these puts was something like $70.

Then, Marks calls up a bunch of news stations around the country and pretended to be a Good Samaritan, telling them how packages of Contac and Dietac were poisoned and that consumers shouldn’t trust companies like Smith-Kline. Well as you can imagine, Smith-Kline’s stock began to fall as the news leaked out about the poisoned drugs.

So how did Ackerman catch Marks?

One day Ackerman was in the pit when he saw the news on TV about Smith-Kline. This news seemed odd to him, so he asked a friend in the pit if anyone in the past few weeks had bought a lot of out-of-the-money puts. Sure enough, one guy knew about Marks’ trade and told Rick. That was the key. Ackerman then called the FBI and proudly told them he had discovered a huge profit-making scheme based on these poisoned drugs and that if they wanted to catch the man behind it, they should follow the options.

But the FBI never acted on his information. Another month went by and Ackerman called them back and insisted they look into it. Then, Special Agent Henry O’Shino was assigned to the case.

Fast forward five or six weeks and Eddie Marks had been caught.

A $300,000 reward had been offered to whoever had information on the case. In the end, Ackerman took home $200,000 while the other $100,000 was split between 17 others claiming to have known it was Marks all along. Rick took the money and threw a party.

As for Eddie Marks, he was sentenced to 27 years in prison for tampering with on-the-shelf medicines, the first sentencing of its kind.

Today, Ackerman runs a newsletter at his website RickAckerman.com. More than 10,000 traders and market professionals read his letter on options, equities, and futures.